Indian Union Budget 2013

Okay this is te time of the year when the annual Jumboree starts with the Union Budget.

The Pink papers have been printing reams of paper analysing in fine details and trying to predict the budget. the Industry captains have had their 5 minutes with the FM and the TV crews are camping outside the FMs residence since morning, as if his early morning ablutions will give them a key to the budget 2013.

Lot is riding on the Budget today. Realistically 90% of the expenses are already accounted for but it is the big ticket and not so big ticket announcement that gives a signal to the world and the to the Domestic audience about the direction the Economy is headed and how the Govt. of the day is going to steer it for the next 12 months.

Request all the Budget related news and views be posted here so that there is no confusion of multiple threads on the same topic.

This yearâ€™s survey, released today to Parliament, is more circumspect about its projections.

Last year Pranab Mukherjee airily projected GDP growth â€œin 2012-13 to be 7.6 percent, +/- 0.25 percent.â€ We now know that it could be as low as 5 percent.

The finance ministry under P Chidambaram still does not think so, which is why it contested the Central Statistics Officeâ€™s advance estimates of 5 percent earlier this month.

But the Economic Survey 2012-13 penned by Rajan is realistic and goes with the CSOâ€™s estimate of 5 percent. Rajan is clearly not one to have his head in the clouds, despite official compulsion to paint a bright picture.

For 2013-14, the survey makes a GDP projection in the range of 6.1-6.7 percent, and inflation for March 2013 at 6.2-6.6 percent.
The survey lists three reasons for the slowdown.

First, it blames both the Finance Ministry and the Reserve Bank for it. The survey clearly holds that Mukherjeeâ€™s post-Lehman stimulus was too much and stayed on for too long. It says: â€œThe boost to demand given by monetary and fiscal stimulus following the crisis was large. Final consumption grew at an average of over 8 percent annually between 2009-10 and 2011-12. The result was strong inflation and a powerful monetary response that also slowed consumption demand.â€

Second, it indirectly points a finger at the policy paralysis for the slowdown, which, it says, resulted from â€œinvestment bottlenecks as well as the tighter monetary policy.â€ The reference is obviously to the extraordinary delays in environmental clearances and government decision-making after the UPA got bogged down in corruption scams post 2010-11.

Third, it apportions some portion of the blame to the global slowdown and the initial weak spread of the monsoon this financial year.

Overall, the survey makes the simple point that Indiaâ€™s economic malaise is as much home-grown as external. It notes: â€œWhile Indiaâ€™s recent slowdown is partly rooted in external causes, domestic causes are also important.â€

A big surprise, which is no surprise to money market watchers, is the sheer amount of cash that Chidambaram will be showing on his balance-sheet for 2013-14. This is intended to impress S&P, Fitch and Moodyâ€™s, the rating agencies who are watching the deficit numbers with a hawkâ€™s eye.

What Chidambaram has done this year is hoard his cash by not allowing any ministry to spend after he took over â€“ beyond basic hygiene amounts. The current estimate is that he has Rs 80,000-1,00,000 crore in the exchequerâ€™s bank balance, and this money is part of the reason why short-term interest rates are so high and the overnight borrowings of banks are around Rs 1,20,000 crore.

What has happened is that Chidambaram has not spent his December advance tax revenues, which has tightened the money market and driven up costs for short-term borrowings. It may also have accentuated the GDP slowdown.

He expects to use this cash surplus to show a more moderate borrowing target in 2013-14 and impress the rating agencies.

According to calculations by Firstpost columnist Arjun Parthasarathy, next yearâ€™s borrowing number will be around Rs 5,25,000 crore gross, and Rs 5,10,000 crore net â€“ which will enable him to maintain the fiscal deficit at around 4.8 percent.

Nothing like Rs 1,00,000 crore in the bank to make a finance minister look good, feel good. Who doesnâ€™t like money in the bank, even if it is only for a fleeting moment?

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So the signal is very clear the Budget will be designed to please the Rating Agencies as well as there will be a balancing effect keeping in view the forthcoming elections.

So the signal is very clear the Budget will be designed to please the Rating Agencies as well as there will be a balancing effect keeping in view the forthcoming elections.

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Sonia may listen or not but Chidambaram & MMS got it right that any more tomfoolery and we will be at junk rating. You can't go to elections with those ratings, its like suicide. Further he will be using incoming forex (maybe also reserves) to plug the holes in deficit, classic trick MMS pulled in '90s. Sonia remained absent for the meeting yesterday, clear sign of her displeasure but inability to do anything otherwise so giving autonomy to Chidambaram for what he is famous.

The amount of money being thrown about looks like it wil be a populist budget.

Wait for the taxes to come. The sting will be in the tail as somebody mentioned.

What a retrograde step, An all woman's bank, that too in an age when women are controlling major banks in India, eg ICICI , Axis, HSBC. Is it a sop to the females as a fall out of the Delhi rape case...WTF

For housing loans limit till Rs 25 lakh â€“ additional Rs 1 lakh exemption for 2013-14 for first time loan takers
Rs 50,000 cr tax free bonds to be allowed by select institutes
Inflation indexed Bonds and NSCs to be issued
SMEs to enjoy benefits for 3 years after they outgrow category
Seek same support of everybody to navigate the Indian economy through crisis
Global economy has slowed from 3.9% to 3.2%
Not unaffected what happens in the world
Current year CSO has estimated growth at 5% and RBI at 5.5% - below India's potential growth rate of 8%
No reason for gloom or pessimism
Only China and Indonesia are growing faster than India
In 2013-14 only China will grow faster than India
Indian economy growing below potential of 8%
Goal of higher growth leading to inclusive and sustainable growth
Plurality and diversity lead to inequitable distribution which needs to be addressed
Women, SCs/STs and other backwards need to be included
Need to create economic space and achieve socio-economic objective
New Fiscal Consolidation measures undertaken to achieve 5.3%
Current Account Deficit major worry
CAD due to higher coal, oil and gold imports
We have to find 75 bn dollar to finance current account deficit
No solution but FDI, FII, ECB to bridge CAD
Achieving high growth is not a novelty and beyond our capacity
Without growth there will be no development and inclusiveness
UPA govt believes in inclusive development with emphasis on improving human development index
At present economic space is constrained
India doesnâ€™t have the choice between welcoming and spurning foreign investment
Development must be sustainable and must have democratic legitimacy
The battle against inflation must be fought on all fronts
Our battle has brought down headline inflation to 7% and core inflation to 4%
Wisdom lies in finding current level of govt expenditure
Faced with huge fiscal deficit no choice but rationalise expenditure
We have retrieved some economic space
Sufficient funds to each ministry and departments
One overarching goal of the budget is to create opportunities for youth
Estimated expenditure Rs 1490925 lakh cr; Revised Rs 1430825 lakh cr
Planned expenditure will be 29.4% more than previous; all projects to be fully funded
Onus on ministries to completely projects in timely manner
Rs 41561 cr for SC sub plan
Rs 24500 cr to ST sub plan
The funds for sub plan cannot be diverted
Rs 77236 cr for child budget
Rs 200 cr for gender equality
Maulana Azad education foundation corpus gets Rs 160 cr more
Rs 110 cr for dept of disable welfare
Rs 37330 cr to ministry of health and family welfare out of which new national health mission to get Rs 21239 cr
Rs 4727 cr for medical education, training
Rs 1069 cr to department of ayush
Rs 1650 cr to AIIMS like institutions
Rs 65867 cr to HRD ministry
Rs 27258 cr for Sarva Siksha Abhiyan
Rs 3983 cr for Rashtriya Madhyamik Shiksha Abhiyan
Rs 13215 cr for mid-day meal scheme
Rs 17700 cr for children care and education
Rs 15260 cr for clean drinking water
Rs 1400 cr for water purification/ clean arsenic
Rs 80195 cr for MNREGA, Indira Awas Yojna, NREGS
PMGSY II to benefit states like Haryana, Punjab, Andhra Pradesh, Karnataka
Rs 14800 cr for JNNURM
Foodgrains production will be 250 mn tonne
Earned Rs 138403 cr due to agri exports
Rs 27049 cr for agri ministry
New scheme for rural road development
Rs 500 cr for crop diversification
The avg growth of agri was 3.6%
Agriculture to get over Rs 3000 cr
Green Revolution in eastern India has been a remarkable success â€“ Rs 1000 cr to these states
Original Green Revolution states to get Rs 500 cr for crop diversification
Watershed management to get Rs 5387 cr
Rs 7 lakh agri credit target
National Institute for Biotech in Raipur, Chhattisgarh
National Livestock Mission to be launched in 2014 for which Rs 307 cr allocated
National biotech centre at Ranchi
National food security bill gets Rs 10000 cr towards incremental cost
Rs 50 cr for FPOs
Equity grants of Rs 10 lak per FPO
Rs 1000 cr for eastern Indian states
Rs 55 lakh cr needed for infra including private funds
Infra Debt Funds will be encouraged; 4 already floated
Rs 25,000 cr raised by institutions as tax free bonds in 2012-13
WB help to be taken for NE states to be connected with Myanmar
Godowns to be constructed with help of panchayats
USD 1 trillion investment in infrastructure
47% of the cost will be shared by private sector
Infrastructure debt funds will be encouraged
4 IDFs have been registered with SEBI
To allow some institutions to raise money through tax free bonds to the total of Rs 50000 cr
Rs 5000 cr for construction of warehouses
Regulatory Authority to oversee road projects
Zero CD for semi conductors/ electronics
First time Rs 12 lakh income limit increased from Rs 10 lakh for MF s
Rajiv Gandhi Equity scheme raised Rs 2 lakh cr
Rs 5000 cr to NABARD to finance construction of warehouses, silos, cold storages
New regulatory authority for road sector
3000 km of road projects in some states will be awarded in first 6 months of 2013-14
Cabinet committee on investment to take up more projects
FM to approve Rs 50,000 cr tax-free bonds in FY14; moving on to infra, he says CCI is the answer to all policy hurdles
New instrument to save savings from inflation called as Inflation Index Bonds details of which will announced in due course
Seven new cities on Delhi-Mumbai corridor
New corridor is Bangalore-Mumbai industrial corridor
Two new ports - in Sagar in WB and one in AP
New outer harbour at Tuticorin through PPP
5 inland waterways have been declared as national waterways, one more announced in Assam
Natural gas pricing policy would be reviewed
5 MMTPA terminals will be fully operational
Non-tax benefits to be made available to MSMEs after they graduate to higher units
Textile tech upgradation to get Rs 2400 cr
Handloom workers to get working capital at concessional rates
SIDBI gets Rs 500 cr
Standing council of experts in ministry finance to analyse competitiveness of Indian financial sector
13 PSU banks to get Rs 14000 cr in 2013-14 as capital infusion
All cooperative banks to be brought under CBS
All PSU banks to have ATMS at their premises
Indiaâ€™s first women bank as a PSU bank with Rs 100 cr as initial capital